Strides Shasun, a Rs.3,450 crore plus pharma major, has entered agreement for sale of its branded generic business to Eris Lifesciences for an aggregate cash consideration of Rs.500 crore. The transaction is subject to customary closing conditions and parties intend to close the transaction by November 30, 2017.
The Bengaluru-based company’s India branded generics business comprise of a portfolio of over 130 brands in the domains of neurology, psychiatry, nutraceuticals, gastro etc. along with the employees forming part of the business. In terms of the agreement, Eris will acquire the marketing and distribution rights for the said portfolio of products in India while Strides will retain the global rights for these products.
Strides scrip moved up by Rs.16.35 in the morning session to Rs.804.05 on BSE today. The scrip touched to yearly lowest level at Rs.754 on November 9, 2017 as against its highest level at Rs.1254. Eris Lifesciences scrip of Re 1 has taken jump of Rs.40.30 to Rs.625.40 on BSE. Recently, Eris scrip touched to yearly highest level at Rs.728.
Commenting on the transaction, Shashank Sinha, managing director, Strides said, “The transaction is the outcome of our portfolio reprioritization, to focus more sharply on larger regulated markets.
“We retain global rights for the divested portfolio, which have significant sales in Africa and will continue to grow our emerging market business. Net proceeds from this transaction will be used to pay down debt to the tune of Rs.400 crore,” he added.
“The transaction is a good strategic fit for Eris and will strengthen our position in the key segments of CNS and gastro-intestinal therapies. We expect to realize cost and revenue synergies from this transaction given Eris’ strong presence in the branded business in India” said Amit Bakshi, managing director, Eris Lifesciences.
With this acquisition, Eris’s fourth—and the largest--in the last 18 months, the company will be among the top ten companies in the central nervous system (CNS) segment. Eris is already among the top 20 companies in the cardiology segment and ranks among the top ten in the diabetology segment.
Since inception in 2007, Eris has focused on the chronic segment” of cardiology and diabetology. Eris had forayed into the CNS segment only recently. This acquisition cements Eris’s position in the top three chronic segments.
Post-acquisition Eris will break into the league of top 25 companies having a market share of more than 1 per cent in the Indian Pharmaceutical Market. The India branded generics business being divested by Strides had sales of Rs.181 crore in FY 2017.
For Strides, MAPE Advisory Group and Tatva Legal acted as the transaction advisor and legal advisor respectively. EY India was the exclusive M&A advisor and Shardul Amarchand Mangaldas & Co was the legal advisor to Eris Lifesciences on this transaction.